Best Buys December 2023
A new month, a new Best Buys List.
Each month, I’ll give an overview of my favorite stocks of the month.
Let’s dive right into an update and show you my 5 favorite stocks for December 2023.
December 2023
In November, the S&P 500 increased by 7.8%. This the best month of 2023 (so far).
Over the same period, our Portfolio increased by 10.0%.
The Fear & Greed Index indicates that we’re currently in ‘Greed’ Mode.
Another interesting fact?
For the first 9 months of the year, the 7 largest stocks within the S&P 500 contributed 84% (!) of the total return of the index. The other 493 stocks in the S&P 500 rose only 3% during the same period.
Best & Worst Performers
Here’s an overview of the top 5 best and worst performers within our investable universe last month.
Worst performers
Best Performers
Great but overvalued
Here’s a list of 5 companies we’d love to own one day, but where we think the valuation looks too expensive at this point in time.
5. Watsco
Watsco operates as a distributor of heating, ventilation, and air conditioning (HVAC) products. They sell these products to contractors, assisting them in providing climate control solutions to residential and commercial customers.
Type of stock: Owner-Operator stock
Investment rationale: Founder-led business with decentralized business model
Current stock price and valuation: $396 and FWD PE of 25.6x
Stock starts to become attractive at: 20% below today’s levels (forward PE of 20x)
4. Inter Parfums
Inter Parfums is a company that designs, manufactures, and markets a variety of fragrances and beauty products. They collaborate with well-known brands to create and distribute perfumes, contributing to the global fragrance industry.
Type of stock: Owner-Operator stock
Investment rationale: Attractive business model with essential products for their customers
Current stock price and valuation: $127 and FWD PE of 24.2x
Stock starts to become attractive at: 10% below today’s levels (forward PE of 22x)
3. Copart
Copart is a company that specializes in online vehicle auctions and the provision of related services. They help buyers, including automotive industry professionals and the general public, purchase used and salvaged vehicles through their online auction platform.
Type of stock: Owner-Operator stock
Investment rationale: Excellent company and clear market leader
Current stock price and valuation: $50.1 and FWD PE of 33.2x
Stock starts to become attractive at: 25% below today’s levels (forward PE of 25x)
2. Cerillion
Cerillion is a software company that focuses on providing billing, charging, and customer management solutions for businesses in the telecommunications, finance, and utilities sectors. Their software helps companies streamline and manage their billing processes and customer interactions.
Type of stock: Owner-Operator stock
Investment rationale: Founder-led business with great culture
Current stock price and valuation: 1360 GBP and FWD PE of 26.5x
Stock starts to become attractive at: 15-20% below today’s levels (forward PE of 22x)
1. Hamilton Lane
Hamilton Lane is an investment management firm that specializes in private markets, offering a range of solutions such as private equity, real assets, and credit. They provide services to institutional investors, helping them access and manage their investments in private markets.
Type of stock: Owner-Operator stock
Investment rationale: Great company. Insiders have 66% of the voting power
Current stock price and valuation: $98.6 and FWD PE of 22.6x
Stock starts to become attractive at: 10% below today’s levels (forward PE of 20x)
Great but undervalued
Here’s a list of companies that match the following criteria:
Within the investable universe of Compounding Quality
Undervalued compared to their own 5-year average valuation
Managed to compound by at least 12% per year over the past 5 years
(Click on the picture to expand)
Selection Compounding Quality
Here’s how our 5 favorite stocks of last month performed:
The average performance was equal to +10.2%. That’s 2.4% better than the S&P 500.
Now let’s dive into our 5 favorite stocks for December 2023.